Under Armour’s challenge: Reaching women

By Jeff Barker, The Baltimore Sun

August 11, 2017

Photo: Amy Davis /TNS

Adrienne Lofton, Senior Vice-president, Global Brand Management, at the Under Armour store in Harbor East on July 27, 2017. Behind her are images of dancer Misty Copeland from the newest ad campaign. Under Armour’s recent campaigns for women include a pitch featuring stylized videos — set to poetry — showcasing the toughness and athleticism of ballerina Misty Copeland and other female athletes.

BALTIMORE — After a second consecutive quarter of losses, Under Armour is talking again about remaking itself from a predominantly men’s brand into a business with broad appeal across all categories of consumers. And CEO Kevin Plank has identified its women’s lines as particularly promising opportunities for growth.

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But for a company that was born on the football field, introduced itself with commercials depicting a muscular sort of grit, and is still run as a kind of supersized team, the pivot Plank describes will be a challenge.

As the Baltimore-based brand seeks to gain on rivals Nike and Adidas in the global market, analysts say, Under Armour must move beyond its masculine image and — like other performance apparel companies run largely by male executives — ensure it isn’t perpetuating the kind of jock culture that excludes the half of the population that purchases most apparel.

“The sports industry is and always has been a male-dominated industry,’ said Matt Powell, an industry analyst for The NPD Group. “Consequently, the sports industry has struggled in growing the women’s business” — and is leaving “a significant amount of business on the table.”

Under Armour says 48 percent of its global workforce of more than 14,000 are women, and females account for about 25 percent of its vice presidents. The numbers of women thin out markedly near the top. Kerry Chandler, the chief human resources officer, is the lone female listed among the 11 executive officers on the company’s investor relations web page. Two of the company’s 10 directors are women.

“The industry is male-dominated,” said Adrienne Lofton, Under Armour’s senior vice president for global brand management. “And that is a hangover from many, many years of sort of the old standard of what it looks like to live and work in sports.

“What we’re focused on is the company and what we can do to continue to drive numbers in a place that feels more balanced and reflects the consumers that we serve.”

It’s not just the sports industry in which men hold most of the highest positions. Women remain scarce in the executive ranks and on the boards of most companies. There are fewer than 30 female CEOs in the Fortune 500.

Analysts say more representation of women in leadership helps companies sell more products to women, who are responsible for the majority of spending on apparel — for themselves, and for the boys and men in their lives.

Bridget Brennan is CEO of the consulting firm Female Factor and author of the 2011 book “Why She Buys.”

“I think that any company striving to make a big impact should be striving both externally and internally,” she said. “The more diverse, the better, especially when serving a diverse population.”

While Under Armour began in football, it has expanded far beyond the gridiron, making products for all major sports, and activities as diverse as running, hunting, working out and going to the mall. The company has invested hundreds of millions of dollars buying fitness and health-tracking apps.

Under Armour’s recent campaigns for women include a pitch featuring stylized videos — set to poetry — showcasing the toughness and athleticism of ballerina Misty Copeland and other female athletes.

“We have an incredibly talented team that is focused on her, what she needs and how we can outfit her 24/7,” said Chandler, the human resources executive.

Under Armour has long sought inroads in the women’s space. The company aired its first women’s commercial — featuring Heather Mitts of the U.S. national soccer team — in 2005, and signed champion skier Lindsey Vonn to an endorsement deal the following year.

Under Armour reached $1 billion in women’s sales in 2016 out of $4.8 billion total revenues. But while the company called the $1 billion figure a “milestone,” the share has stayed mostly in the 20 to 30 percent range for years, even as the company has grown.

“We see an incredible amount of runway for this business,” Plank said during an April earnings call. “But there is work to be done.”

Altering consumers’ initial impressions of a brand can be a challenge. After Under Armour burst onto the market 21 years ago, the company’s early ads featured sculpted, grunting men lifting weights in barren gyms, and a coach bellowing at players in a low growl.

The design of Under Armour’s stores, and even its name, “are very masculine,” said Neil Saunders, an analyst with the research firm GlobalData Retail.

“It’s certainly made some inroads with women and to diversify,” he said. But “it’s still viewed by most people as a very masculine brand. They have integrated some very successful women (as endorsers), but it’s still a very male-dominated lineup.”

The company’s celebrity athletes include Olympic swimming icon Michael Phelps, golfing champion Jordan Spieth and NBA star Stephen Curry. Under Armour retains a significant presence in football and has even signed deals to outfit college football officials from the major conferences on game days. One of the company’s most prominent endorsers — New England Patriots quarterback Tom Brady — is a football player, and Plank’s management style borrows heavily from his days as a special teams player and running back at the University of Maryland.

Under Armour began as the answer to a football problem. Plank found that the T-shirt he wore under his gear would quickly become drenched with sweat. He created the moisture-wicking synthetic undergarment that became the company’s signature product.

While many CEOs use the language and imagery of sports to convey a sense of working as a unit, Plank, 44, has integrated the ethos of football and team sports generally into the company’s culture to an unusual degree.

At Under Armour, everyone is a “teammate,” interns are “rookies” and orientation is “preseason training.” Just as some college coaches won’t utter the name of their chief rival, the uber-competitive Plank rarely says “Nike” in public. The name of Under Armour’s vast new office space in Baltimore — “Building 37” — is a nod to Plank’s college jersey number.

Under Armour did not make Plank available for an interview for this story. He answered questions in an email last month.

“Operating as a team was the same foundation I used to start our company,” Plank wrote. “Sales and marketing were like offense, manufacturing and distribution were like defense, finance and IT were like special teams,” he wrote.

Plank writes messages to the staff on an erasable board in his office of the sort that many coaches use: “OVER PROMISE AND DELIVER,” “DICTATE THE TEMPO,” and — at the center, in red — “DON’T FORGET TO SELL SHIRTS AND SHOES.”

David Bradford, who teaches at Stanford’s Graduate School of Business, said the style has benefits — and potential costs.

With his football-team analogies, Bradford said, Plank “is being inspirational, so he’s moving people away from the mundane tasks to showing how those tasks really fit within a larger vision.

“The danger is that it can seem like an old boys’ club. Soccer is a better analogy, because girls and women are playing a lot of soccer these days.”

Lofton, the senior vice president, said women at the company aren’t limited. She said the diverse composition of her brand management team — responsible for marketing strategy — “reflects the country and ultimately the globe.”

“I am an African-American female,” she said. “And so, to me, looking at the complexity of our company — and making sure we look like the consumers we serve — is critical.”

Complaints that the company has a “male culture” appear periodically on the jobs site Glassdoor. Under Armour generally gets positive reviews as a workplace on the site.

Three former Under Armour employees said the scarcity of women in the upper echelon was noticeable. The former employees, who worked at varying levels at the company’s headquarters, spoke on condition of anonymity because they did not want to hurt their careers.

One, a woman, expressed a sense of women being unable to crack into the inner sanctum. She also said she was struck by the tone at Plank’s annual Preakness-eve parties, hosted at his Baltimore County horse farm for VIP guests, but attended by some Under Armour employees as part of a “hospitality weekend” to promote the company’s brand and the city.

This year, it featured a cigar deck and young women in cutoff jeans and matching tank tops who greeted visitors and hopped up on the bars to dance to live music.

The company said the party, held for the 10th time this year, is designed to appeal to a variety of tastes, with musical acts, hot-air balloon rides, a pick-pocket artist and lawn games.

“This party is full of entertainment,” Lofton said. “It’s one of the coolest parties this city throws.”

As for cigars, she said: “I requested cigars because I smoke them. When I’m hanging out and I’m having a drink, bourbon is my favorite. So saying that is a male thing is exactly the point of why we have the (marketing) campaigns we have, because that is a stereotype.”

Workplace image is critical to Under Armour and Nike because they frequently compete for the same executives, designers and other employees. Under Armour — 32 years younger than its rival — is in perennial recruitment mode because it is growing so quickly. The company is developing a new campus on the waterfront that could support as many as 10,000 employees, nearly five times the current number.

Nike also is seeking more diversity in its ranks. Two of Nike’s eight executive officers and three of its 12 board members are women.

“We are committed to accelerating our representation and increasing the number of women and people of color we have in leadership roles,” Nike said in a statement in reply to a Baltimore Sun query.

German competitor Adidas, with one woman on its six-member executive board, has made a similar pledge.

At H&M, the men’s and women’s clothing company, seven of the 12 board members are women. At Lululemon, one of the hottest brands for women, two of the top six executives are women, as are three of its 10-person board.

Saunders said Lululemon “has had some of the same issues” marketing to men that Under Armour has had to women. But he said Lululemon has had success with leggings and jackets for men.

“Men have kind of latched onto these very specific products,” Saunders said. “With Under Armour, it’s very diffuse. It doesn’t own any specific space in women’s sport.”

Under Armour’s women’s sales leaders have included training and running products such as bras, bottoms and footwear.

Asked whether Under Armour was planning anything different as part of its renewed push, senior vice president Pam Catlett replied in an email.

“We will continue to break new ground with our women’s business by consistently recognizing the ways in which women are redefining the athletic experience and by creating great product that meets her evolving needs,” she wrote.

Analysts say sports-connected industries can be slower than others to understand the women’s market.

“In most cases, sports around the world are seen in the context of male first,” said Jason Moser, an analyst at The Motley Fool. “Yet as time goes on, it’s clear that more and more women are shaping the world of sport. Having women in positions of leadership in any industry is beneficial, but certainly in sport it would seem even more of an advantage for that perspective in what amounts to half of the overall target market.”

Through 2016, Under Armour had reported quarterly sales gains of 20 percent or more for nearly seven years. Earlier this month, the company reported a net loss of $12 million, or a loss of 3 cents per share, for the three months that ended June 30. It also announced a series of efficiencies, including 280 job cuts, and said it was boosting its digital and online business.

Like other sports brands, Under Armour has faced competition from lower-priced apparel manufacturers, a slower pace of sales in both the performance apparel and footwear categories, and the closing of stores that sold its products.

In recent months, the company has been honing its “employment branding” strategy to promote its product innovations and the ability of employees to live near its current complex of brick buildings. In May, LinkedIn listed Under Armour among the 50 companies most able to attract and retain top talent.

Under Armour has eight employee-created “culture clubs” — including for black, Latino, gay and Asian workers. Lofton, who has spent a total of seven years in two separate stints at Under Armour, said she is “bullish” on the company, and its continued ability to hire and uplift a diverse talent pool.

She said she was particularly proud of the recent marketing campaign celebrating Copeland — the first African-American female principal dancer with the American Ballet Theater — and other women. The campaign stressed that women have earned the right to not have their achievements compared to men’s.

“We have evolved this brand,” Lofton said. “What’s always great as a marketer is when you hear women say, ‘I had no idea Under Armour made that. Where can I find that?’”